1997 (9) TMI 208 - AT - Central Excise

Issues Involved:
1. Classification of "Tool bit blanks" under different tariff headings.
2. Applicability of Rule 2(a) of the Rules of Interpretation of the Tariff.
3. Determination of the correct tariff heading before and after 1-3-1988.

Detailed Analysis:

1. Classification of "Tool bit blanks" under different tariff headings:

The appellants purchase round bars and square bars of special steels, subject them to heat treatment, polish and clean them, and then cut them to specific sizes. The customers further process these blanks to acquire working edges and surfaces. The appellants claimed classification under Heading 72.09 up to 1-3-1988 and under Heading 72.28 or alternatively under Heading 72.24 after 1-3-1988. The Departmental authorities at Bombay classified the goods under Heading 8202.10 as interchangeable tools for hand tools, while the authorities at Gujarat classified them under Heading 7308.90 up to 1-3-1988 and under Heading 7326.90 after 1-3-1988.

2. Applicability of Rule 2(a) of the Rules of Interpretation of the Tariff:

The lower authorities relied on Rule 2(a), which states: "Any reference in a heading to goods shall be taken to include a reference to these - goods incomplete or unfinished, provided - that the incomplete or unfinished goods have the essential character of the complete or finished goods." However, the Tribunal found that the tool bit blanks did not have the essential character of the complete or finished goods, as they lacked working edges or surfaces at the stage of manufacture and clearance. Therefore, classification under Chapter 82 as tools was ruled out.

3. Determination of the correct tariff heading before and after 1-3-1988:

The Tribunal held that the tool bit blanks should be classified under Heading 7308.90 up to 1-3-1988 and under Heading 7224.00 after 1-3-1988. This decision was based on the fact that the blanks had not acquired the characteristics of tools and were considered semi-finished products. The impugned Order-in-Appeal No. E/3554/87-B was set aside, and the appeal was allowed, while the impugned Order-in-Appeal No. E/4553/94-B was modified accordingly.

Separate Judgments:

Majority Opinion:
The majority opinion, including the views of Member (J) and Member (J) S.L. Peeran, concluded that the tool bit blanks should be classified under Heading 7308.90 up to 1-3-1988 and under Heading 7224.00 after 1-3-1988. They emphasized that the blanks had not acquired the essential characteristics of tools and should be classified as semi-finished products.

Dissenting Opinion:
The Vice President, S.K. Bhatnagar, held that the items should be classified under Chapter 82, as they were blanks for certain types of tools and had acquired essential characteristics identifiable as blanks for particular tools. He proposed remanding the matter for de novo adjudication to determine the exact sub-classification under Chapter 82.

Final Decision:
In view of the majority opinion, the tool bit blanks were classified under Heading 7308.90 up to 1-3-1988 and under Heading 7224.00 after 1-3-1988. The appeals were disposed of accordingly.

← Previous Next →